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What do you mean by credit multiplier?
Credit multiplier measures the amount of money that the banks are able to create in the form of deposits with every initial deposit. Example: The process of money creation can be explained by taking an example of a bank.
What is a multiplier with example?
A multiplier is simply a factor that amplifies or increase the base value of something else. A multiplier of 2x, for instance, would double the base figure. A multiplier of 0.5x, on the other hand, would actually reduce the base figure by half. Many different multipliers exist in finance and economics.
What is meant by credit multiplier Class 12?
Solution: Money multiplier is the number by which total deposits can increase due to a given change in deposits. It is inversely related to legal reserve ratio. Ques 5 Distinguish between ‘Qualitative and Quantitative tools’ of credit control as may be used by a Central Bank.
What is multiplier in macroeconomics?
In macroeconomics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in some exogenous variable. For example, suppose variable x changes by 1 unit, which causes another variable y to change by M units. Then the multiplier is M.
What do you mean by multiplier explain the relationship between MPC and multiplier?
Answer: Multiplier refer to the increment amount of Income due to increase in the investment in the economy, Whereas MPC refers the increment amount of consumption from an unit increase in the income of the person/economy as a whole.
What is the other name of credit multiplier?
Money multiplier is a phenomenon of creating money in the economy in the form of credit creation. The money is created in the market based on the fractional reserve banking system. It is also sometimes called monetary multiplier or credit multiplier.
What is multiplier in VLSI?
A binary multiplier is an electronic circuit used in digital electronics, such as a computer, to multiply two binary numbers.